Modernising asset finance: The build or buy dilemma, explained

Legacy systems have become a major obstacle in asset finance. If you’re a decision-maker at a bank or finance company, you know the stakes are high. Will you invest in building your own custom tech platform, or buy a tried-and-tested third-party solution?

The right choice could mean securing your company’s future. The wrong one could leave you stuck with the same technical debt that’s holding back the industry. In this post, we break down the real-world considerations that non-tech institutions must weigh as they modernise asset finance operations to keep money working hard.

The growing challenge of technical debt

Technical debt has gone from being a software development nuisance to a critical business risk. Over 90% of CTOs say it’s their biggest challenge, and 71% say it’s a direct blocker to innovation.¹ For asset finance institutions, this dilemma is clear. Outdated technology is putting your ability to compete and innovate in jeopardy. Modernisation is no longer optional; it’s a requirement for survival.

Why the build vs. buy debate is outdated

It’s tempting to see the question as a stark choice between two extremes. Build your own for total control, or buy off-the-shelf to save costs. It’s not that simple anymore. The landscape has changed radically due to three industry shifts:

1. Cloud-native SaaS products make adoption faster and more scalable, lowering total cost of ownership and regulatory headaches. Many vendors now act as strategic partners, not just suppliers.
2. Out-of-the-box SaaS platforms offer pre-configured solutions grounded in global best practices. The result is a rapid return on investment, sometimes as fast as three to six months, and a foundation for scalable growth.
3. Despite rising technology budgets (global banking IT spend hit $650 billion in 2023), most banks aren’t seeing true gains. US bank productivity, for example, has dropped slightly every year since 2010. That’s because in-house tech builds often spiral into complex, fragmented systems. Maintaining them eats up as much as 70% of IT budgets, leaving little for true innovation.

Each of these shifts points to a simple truth. Banks and asset finance companies need a new way to think about technology investments. It’s not about full build or pure buy. It’s about aligning your choice with your strategy, market position and operational strengths.

Key factors in the build or buy decision

Selecting a path forward is not a matter of ideology. It’s about fit. Here are five factors to consider:

1. Strategic control vs. speed to market

If your business requires tight integration between advanced risk models and asset data (for example, aviation finance tracking real-time engine metrics), building in-house can offer custom control. But research shows that prioritising a fast go-to-market delivers ROI 2.3 times quicker when you partner with a vendor for most core features and then build only specialised layers that set you apart.

2. Hidden costs of ownership

Large-scale tech projects regularly exceed budgets, miss deadlines and underdeliver. High tech spend doesn’t always yield productivity gains, especially as third-party vendors quickly mimic new features, making innovation hard to sustain. Most IT budgets go to maintaining existing systems, not driving differentiation. True ROI is often eroded by costs no one forecasted at the outset.

3. Regulatory agility

The pace of regulatory change in finance is punishing. SaaS and cloud vendors can deliver compliance updates quickly, keeping you in step with new requirements. Still, complex organisations underwriting niche risks, such as green energy projects, may need proprietary tools (like ESG rating systems) that can’t be bought off the shelf.

4. Integration with the ecosystem

Today, asset finance means working closely with networks of partners, suppliers and even competitors. To move from legacy isolation to modern collaboration, you need system architectures that can plug in fast. API-first platforms dramatically reduce onboarding times for partners. Some institutions scale partner integration from nine months down to six weeks, unlocking the agility required for just-in-time inventory financing.

5. Cost of complexity

Compliance requirements, AI adoption and frequent legacy upgrades will drive tech spending even higher. But many organisations underestimate how complex, and costly, their new solutions will be to maintain. True cost of ownership is more than project bills. Maintenance, future technical debt and rising infrastructure demands can eat into any expected benefit.

The new imperative: modernise with purpose and balance

Winning institutions adopt a pragmatic, not dogmatic, approach. That means:

• Rejecting “build vs. buy” as an all-or-nothing mindset. Instead, combine both to play to your strengths.
• Buying cloud-native, AI-ready commodities (like contract management systems or compliance platforms) to speed up implementation and reduce costs on non-differentiating functions.
• Building only where you gain a real competitive edge, such as proprietary algorithms, asset utilisation tools or advanced pricing strategies.
• Prioritising ecosystem orchestration by using systems built for API connectivity. Modern partners require seamless, rapid data exchange.
• Centralising data governance. Modernised organisations connect processes and tools across the business, ensuring people know how and why to use data. That data, when structured in standardised ways, becomes a foundation for advanced AI applications across the enterprise.

A case for maturity and measured growth

Recent research confirms the payoff is real. Companies that have embraced fully modern, AI-enabled processes have nearly doubled year-on-year (from 9% in 2023 to 16% in 2024). The result? These leaders are seeing 2.5 times higher revenue growth, 2.4 times greater productivity and more than triple the success at scaling AI solutions.² But maturity is a challenge. Almost two-thirds of organisations admit their data is still not ready for the generative AI era, and 70% struggle to scale projects leveraging proprietary data.

Unlocking long-term advantage

Companies thriving in the future of asset finance will treat technology as a living ecosystem, not a static asset. By aligning technology choices with organisational DNA and industry realities, you can modernise outdated systems without morphing into a tech company. This approach keeps your capital and talent focused on your true differentiators.

Here’s how the most innovative asset finance firms are approaching modernisation:

• They avoid all-or-nothing thinking and blend build and buy solutions.
• They buy proven, scalable tools for the backbone of their business to keep up with speed, regulatory change and cost-efficiency.
• They invest in building those solutions that give them a unique edge in the market.
• They connect with a growing ecosystem of external partners, leveraging open APIs to move quickly as new opportunities emerge.
• They structure their data and workflows for ongoing AI innovation, not just short-term fixes.

Final thoughts

The asset finance industry stands at a pivotal crossroads. Modernising now requires more than a one-off IT project. It demands a deliberate strategy, continuous investment, and a keen understanding of the interconnected business, technology and regulatory landscape.

Asset finance modernisation is not about building everything or buying everything. It’s about knowing your institution, recognising when to leverage external expertise, and empowering your teams to focus on delivering value where it matters most. Firms who follow this path will not only survive but thrive as the money lifecycle grows more complex in the years ahead.

Notes:

¹  91% of CTOs believe technical debt is their biggest challenge, says STX Next research – Intelligent CIO Europe

² Accenture, “Reinventing Enterprise Operations with Gen AI”